building a STRONGER foundation - Cemex

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Reconciliation of stockholders’ equity under MFRS to U.S. GAAP CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES Notes to the Consolidated Financial Statements – (Continued) As of December 31, 2010, 2009 and 2008 (Millions of Mexican pesos) As of December 31, 2010 and 2009, the main differences between MFRS and U.S. GAAP, and their effect on consolidated stockholders' equity, with an explanation of the adjustments, are presented below: 2010 2009 Total stockholders' equity reported under MFRS...................................................................... Ps 213,700 257,570 U.S. GAAP adjustments: 1. Goodwill (notes 24(b) and (j)) .................................................................................................. (27,193) (27,760) 2. Other intangible assets (note 24(j)) ........................................................................................... (179) (179) 3. Income taxes (note 24(c)).......................................................................................................... 2,393 2,678 4. Accounting for uncertainty in income taxes (note 24(d)).......................................................... (7,246) (13,265) 5. Employee benefits (note 24(e))................................................................................................. (6,586) (6,141) 6. Non-controlling interest – Financing transactions (note 24(f)) ................................................. (16,310) (39,859) 7. Inflation adjustment for machinery and equipment (note 24(g))............................................... 3,532 3,839 8. Financial instruments – Fair value measurements (note 24(h))................................................. 206 247 9. Financial instruments - Mandatorily convertible securities (note 24(h))................................... (2,036) (2,036) 10. Financial instruments - Optional convertible subordinated notes (note 24(h)) ......................... (1,258) – 11. Other adjustments – Deferred charges (note 24(k)) .................................................................. (4,208) (5,769) 12. Other adjustments – Capitalized interest (note 24(k))............................................................... 56 79 Approximate U.S. GAAP adjustments...................................................................................... (58,829) (88,166) Total stockholders' equity under U.S. GAAP (note 24(f)) ........................................................ Ps 154,871 169,404 The following table presents summarized consolidated financial information of balance sheets as of December 31, 2010 and 2009, prepared under U.S. GAAP, including all reconciling items and reclassifications as compared to MFRS described in this note 24: At December 31, 2010 At December 31, 2009 MFRS Change U.S. GAAP MFRS Change U.S. GAAP Current assets 1, 2............................................................................Ps 54,567 7,182 61,749 56,770 5,615 62,385 Investments in associates, other investments and non-current accounts receivable...................................................................... 23,175 2,542 25,717 32,144 2,600 34,744 Property, machinery and equipment 3, 4.......................................... 231,458 8,812 240,270 258,863 9,687 268,550 Goodwill, intangible assets and deferred charges, net .................... 205,897 (29,568) 176,329 234,509 (41,647) 192,862 Total assets ..................................................................................... 515,097 (11,032) 504,065 582,286 (23,745) 558,541 Current liabilities 1, 2................................................................................ 55,119 4,428 59,547 49,213 1,549 50,762 Long-term debt ............................................................................... 197,181 (113) 197,068 203,751 (149) 203,602 Other non-current liabilities............................................................ 49,097 27,172 76,269 71,752 23,162 94,914 Perpetual debentures....................................................................... – 16,310 16,310 – 39,859 39,859 Total liabilities................................................................................ 301,397 47,797 349,194 324,716 64,421 389,137 Controlling interest......................................................................... 194,176 (42,639) 151,537 213,873 (48,334) 165,539 Non-controlling interest.................................................................. 19,524 (16,190) 3,334 43,697 (39,832) 3,865 Consolidated stockholders' equity .................................................. 213,700 (58,829) 154,871 257,570 (88,166) 169,404 Total liabilities and stockholders' equity.........................................Ps 515,097 (11,032) 504,065 582,286 (23,745) 558,541 Additional reclassifications under U.S. GAAP The summarized consolidated financial information under U.S. GAAP presented in the table above includes several reclassifications as compared to the summarized consolidated financial information under MFRS. The main reclassifications at December 31, 2010 and 2009 are as follows: 1 In connection with deferred income taxes, as of December 31, 2010 and 2009, current assets under U.S. GAAP include assets of Ps4,496 and Ps6,499, respectively, which are considered non-current items under MFRS. Likewise, current liabilities under U.S. GAAP include liabilities of Ps4,150 in 2010 and Ps1,680 in 2009 classified as non-current items under MFRS. 2 Includes the reversal of receivables sold under MFRS that do not qualify for derecognition under U.S. GAAP for approximately Ps3,617 in 2010 (note 24(n)). 3 Assets classified as held for sale under MFRS (note 8) for approximately Ps965 and Ps1,255, as of December 31, 2010 and 2009, respectively, were reclassified to long-term assets in the condensed financial balance sheet information under U.S. GAAP. These assets are stated at their estimated fair value. Estimated costs to sell these assets are not significant. 4 At December 31, 2010 and 2009, extraction rights in the aggregates sector, net of accumulated amortization, of approximately Ps5,953 (US$482) and Ps6,302 (US$481), respectively (note 11), recognized as intangible assets under MFRS, were reclassified as part of the book value of the quarries in property, machinery and equipment under U.S. GAAP, in accordance with ASC 805-20-55-37, Whether Mineral Rights are Tangible or Intangible Assets. F-64
(b) Goodwill CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES Notes to the Consolidated Financial Statements – (Continued) As of December 31, 2010, 2009 and 2008 (Millions of Mexican pesos) Goodwill recognized under MFRS (note 11) has been adjusted under U.S. GAAP for: (i) the effect on goodwill from the U.S. GAAP adjustments as of the acquisition dates; (ii) beginning January 1, 2002, goodwill is not amortized under U.S. GAAP, while under MFRS goodwill was amortized until December 31, 2004; and (iii) until December 31, 2003, goodwill under MFRS was carried in the functional currencies of the holding companies for the reporting units, was translated into pesos and was then restated based on the Mexican inflation, while under U.S. GAAP, goodwill is carried in the functional currencies of the reporting units, and is restated, when inflationary accounting is applicable under MFRS, by the inflation factor of the reporting unit's country, and is translated into Mexican pesos at the exchange rates prevailing at the reporting date. Goodwill generated beginning January 1, 2005 under MFRS is carried consistently with the treatment of goodwill under U.S. GAAP. The reconciliation of goodwill under MFRS and U.S. GAAP for the years ended December 31, 2010, 2009 and 2008 is as follows: 2010 2009 2008 Goodwill under MFRS..................................................................................... Ps 142,094 150,827 157,541 Cumulative U.S. GAAP adjustments............................................................... (27,193) (27,760) (31,502) Goodwill under U.S. GAAP ............................................................................ 114,901 123,067 126,039 U.S. GAAP adjustments: Cumulative U.S. GAAP adjustments at beginning of year .............................. (27,760) (31,502) 11,675 Foreign exchange results and inflation effects............................................. 567 2,813 2,721 Impairment charges (see note 24(j))............................................................ – 929 (45,898) Cumulative U.S. GAAP adjustments at end of year ........................................ Ps (27,193) (27,760) (31,502) The accumulated impairment losses as of Decemeber 31, 2010 amounts approximately Ps46,150. (c) Income Taxes and Employees' Statutory Profit Sharing Deferred Income Taxes Under MFRS, CEMEX determines deferred income taxes in a manner similar to U.S. GAAP (note 15B). Nonetheless, there are specific differences as compared to the calculation under ASC 740, Income Taxes (“ASC 740”), resulting in adjustments in the reconciliation to U.S. GAAP. These differences mainly arise from: (i) the recognition of the accumulated initial effect of the asset and liability method under MFRS did not consider the deferred tax consequences of business combinations made before January 1, 2000; and (ii) the effects of deferred tax on the reconciling items between MFRS and U.S. GAAP. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities under U.S. GAAP at December 31, 2010 and 2009 are presented below: 2010 2009 Deferred tax assets: Tax loss and tax credits carryforwards......................................................................................... Ps 73,843 77,602 Accounts payable and accrued expenses...................................................................................... 8,206 8,487 Others........................................................................................................................................... 13,302 3,364 Total gross deferred tax assets ..................................................................................................... 95,351 89,453 Less valuation allowance ............................................................................................................. (40,137) (32,079) Total deferred tax assets under U.S. GAAP ............................................................................. 55,214 57,374 Deferred tax liabilities: Property, machinery and equipment............................................................................................. (42,740) (48,198) Others........................................................................................................................................... (4,882) (4,571) Total deferred tax liability under U.S. GAAP .......................................................................... (47,622) (52,769) Net deferred tax asset under U.S. GAAP ..................................................................................... Ps 7,592 4,605 Under U.S. GAAP, tax effects of intra-group transactions where the related assets remain in the consolidated balance sheet should be eliminated in consolidation until the time at which the asset is sold outside the group. Under MFRS, the tax effects recognized by each subsidiary as part of such intra-group sale of assets are not reversed. During 2008 (note 24(k)), in connection with an intra-group transfer of intangible assets, a deferred tax asset recognized by the buyer under MFRS in the amount of Ps2,206 was eliminated for U.S. GAAP purposes. The carrying amount of such deferred tax asset under MFRS as of December 31, 2010 and 2009 was Ps2,343 and Ps1,986, respectively. During 2010, the estimated useful life of the asset was revised, considering a non-significant change in estimation which was accounted for prospectively. As of December 31, 2010 and 2009, the deferred income tax benefit and expense recorded under MFRS, which was reversed for U.S. GAAP purposes was Ps83 and Ps220, respectively. F-65
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CEMEX 2010 20F REPORT building a ST
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Securities registered or to be regi
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Qualitative and Quantitative Market
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INTRODUCTION CEMEX, S.A.B. de C.V.
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As a result of the foregoing transa
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In the U.S., the recession was long
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The Financing Agreement contains ev
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The Financing Agreement restricts u
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During 2009, we reduced the aggrega
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The instruments governing our debt
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On the legislative front, during th
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Our operations in South America, Ce
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the depositary to vote the CPOs und
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Beginning in 2008, MFRS B-10 has el
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(1) Cost of sales includes deprecia
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Item 4 - Information on the Company
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As a condition to closing the RMC a
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Provide our customers with the best
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In connection with the implementati
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In 2010, as a result of our efforts
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In addition, we are one of the worl
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(2) Our cement raw materials operat
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Our Corporate Structure We are a ho
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Cement in Mexico is sold principall
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Aggregates. Our aggregates operatio
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Beginning on June 30, 2008, Ready M
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Products and Distribution Channels
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On December 26, 2008, we sold our C
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Ready-Mix Concrete. Our ready-mix c
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Aggregates. In 2010, we reduced fix
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Our Operating Network in France Des
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In April 2006, we initiated an expa
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Our Operating Network in Colombia P
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Our Operations in Nicaragua Overvie
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Our Operations in the United Arab E
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Our Trading Operations In 2010, we
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On December 10, 2010, after receivi
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To prevent, control and remediate e
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As required by the directive, each
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For the 2010 fiscal year, CEMEX wil
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Separately, the government of Venez
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and CEMEX was required by August 11
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January 1, 2008, however, under MFR
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foreign subsidiaries. These instrum
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Valuation reserves on accounts rece
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Stage 1. Communication to the organ
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Year Ended December 31, 2010 Compar
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Geographic Segment 89 Variations in
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United Kingdom Our domestic cement
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ended December 31, 2010, Africa and
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Operating Income. For the reasons m
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Our comprehensive financing result
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The following tables present select
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Mexico Our domestic cement sales vo
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As a result of the decreases in dom
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For the year ended December 31, 200
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South America, Central America and
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On August 14, 2009, we entered into
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As of December 31, 2010, we had U.S
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Our Perpetual Debentures As of Dece
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The Financing Agreement, as amended
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In 1999, CEMEX entered into an agre
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Our Equity Derivative Forward Contr
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As of December 31, 2009 and 2010, C
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In addition, we have entered into f
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Private Cash Tender Offer to Holder
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Name, Position (Age) Experience Jai
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Name, Position (Age) Experience Ram
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Tomás Milmo Santos (46) Has been a
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Set forth below are the names of th
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Consolidated ESOP Information Stock
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Item 7 - Major Shareholders and Rel
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The following table sets forth the
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Item 10 - Additional Information Ar
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exempt from registration pursuant t
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Our board of directors shall prepar
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Under our by-laws, shareholders rep
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On June 2, 2008, CEMEX, through one
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Exchange Controls See “Item 3 —
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The gross amount of any dividends p
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We have agreed to pay some of the o
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Item 16G - Corporate Governance Sec
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Item 17 - Financial Statements Not
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4.17 Debenture Purchase Agreement,
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4.27.3 Amendment No. 1 to U.S.$525,
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4.41.4 Accession Letter, dated Janu
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4.57 Amended and Restated Dealer Ma
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SIGNATURES CEMEX, S.A.B. de C.V. he
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The Board of Directors and Stockhol
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CEMEX, S.A.B. DE C.V. AND SUBSIDIAR
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CEMEX, S.A.B. DE C.V. AND SUBSIDIAR
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1. DESCRIPTION OF BUSINESS CEMEX, S
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C) USE OF ESTIMATES CEMEX, S.A.B. D
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J) IMPAIRMENT OF LONG LIVED ASSETS
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